This Week in Logistics News (March 4-8, 2013)

By Adrian Gonzalez

I spent several nights this week in Little League baseball tryouts and meetings, culminating in the Majors draft last night. And this morning I woke up to snow, at least a foot of it, with more falling. Welcome to baseball in New England, where you pray the snow melts by opening day (at least in the infield), and the players wear jackets on the field and warm their hands and sip hot chocolate on the bench.

Before I go back out to shovel, this week’s news…

Transite announced that it is merging with 3Gtms, which will effectively double the size of the company and bring on board a team of experienced TMS managers and developers, including CEO Mitch Weseley who has a long history in the TMS market (he was the founder of G-Log, which was bought by Oracle in 2005, and he was also the founder of Weseley Software Development Corp., which ultimately ended up at RedPrairie, now part of JDA Software). Here is an excerpt from the press release highlighting the company’s focus moving forward:

The name 3Gtms signifies the third generation of transportation management systems.The first generation fulfilled domestic needs, which were primarily used to manage trucking, while the second addressed the complexities inherent in handling all freight, all functions, all geographies and all modes. 3Gtms will build a third-generation TMS to satisfy the needs of the small and middle markets that do not need the extreme complexity of features found in today’s TMS systems, but require a more user-friendly, streamlined TMS that is highly flexible and delivers a faster time to value.

As I wrote last October in “Why Do Truckers and Brokers Want to be 3PLs?”, the majority of small and mid-sized shippers still don’t have a transportation management system and they still manage their operations in-house. For a variety of reasons (high cost of sales being one of them), most TMS vendors and 3PLs have historically underserved this segment of the market, focusing their sales efforts on large shippers instead. Simply put, 3Gtms certainly has the right focus; its main challenge will be overcoming the high cost of sales and relatively long deployment times that have stymied other vendors.

Descartes reported an 11 percent increase in total revenues, a 33 percent increase in net income, and a 27 percent increase in cash provided by operating activities in its Fiscal Year 2012 compared to the previous year. Part of this growth was driven through several acquisitions, including Infodis, Integrated Export Systems, and Exentra. But here’s the part that caught my attention: according to the press release, the company has “more than 164,000 parties connected to the Logistics Technology Platform exchanging more than 4.5 billion messages each year” — further proof of the rise of supply chain operating networks.

Ryder announced a new brand name — Ryder Dedicated — for its dedicated transportation solution, formerly known as Dedicated Contract Carriage (DCC). Along with the new name, Ryder has added new integrated services and technology, as described in the press release:

Ryder Dedicated customers can also gain additional efficiencies by adding on Transportation Management services. This new integrated solution helps fleets tap into backhaul revenue-sharing opportunities with other Ryder customers to minimize empty miles and offset transportation costs. Working with Ryder, customers have access to unmatched capacity – whether it’s by accessing vehicles from one of the largest commercial fleets in North America or adding the flexibility of using third-party carriers.

A new proprietary technology platform brings greater visibility and operational efficiency across the entire Ryder’s Dedicated fleet to better optimize assets, routes, service levels and total operating costs for customers.

This new integrated service aligns with one of the recommendations I made last June in “Picking the Low Hanging Fruit for Transportation Savings” — Break down the barriers between inbound and outbound, private/dedicated fleet and common carriers. We all know it happens: your private/dedicated fleet comes back empty from an outbound delivery while a common carrier follows behind with inbound goods. Optimizing inbound separately from outbound, and your private/dedicated fleet separately from common carriers, is what leads to empty miles.

FedEx and BNSF made news this week on the green and sustainability front. Back in 2008, FedEx set a goal to improve the overall fuel efficiency of the FedEx Express global vehicle fleet 20 percent by 2020, as compared with its 2005 performance. This week the company announced that it has already surpassed that goal with a more than 22 percent cumulative improvement in fuel economy for its vehicles. Here is an excerpt from the press release:

By pursuing the most promising avenues of advanced technologies, enlisting a variety of experienced manufacturers and optimizing our vehicle operations [emphasis mine], FedEx Express has been able to improve the fuel efficiency of its vehicle fleet at a faster rate than expected. FedEx Express has seen the biggest impact on overall fuel efficiency from its strategy of matching the right vehicle to each route. This initiative has not only accelerated progress towards the fuel efficiency goal, but it has yielded substantial economic and environmental returns as well. FedEx Express expects to save approximately 20 million gallons of fuel this year through these efforts to increase vehicle fuel efficiency.

As highlighted above, it’s interesting to note that the biggest gains didn’t come from using alternative fuel vehicles, but from improved optimization and “matching the right vehicle to each route.”

Meanwhile, according to a Wall Street Journal report, BNSF is testing locomotives powered by natural gas. Here are a couple of interesting excerpts from the article:

“This could be a transformational event for our railroad,” BNSF Chief Executive Matt Rose said of the plan, which hasn’t been publicly announced. Shifting to natural gas would “rank right up there” with the industry’s historic transition away from steam engines last century, he said.

A potential shift to gas faces many hurdles, however, including getting approval from federal regulators on fuel-tank safety. Introducing gas also will require different fuel depots, special tanker cars to carry the fuel and training for depot workers.

All of this activity begs the question: Who needs cap-and-trade regulation when the transportation industry (and others) are proactively taking steps to become more green, while also saving money?

Okay, time to shovel some snow. Have a great weekend!

Song of the Week: “Radio GaGa” by Queen